The Fundamentals Of Paul Samuelson

The Fundamentals Of Paul Samuelson

'A great man is a great nuisance' runs an old Chinese proverb and, in the sense that it is difficult to adequately portray all of his ideas and contributions to economics in an essay of this length, this is true of Samuelson. It is clear that he has been a fence-builder, trying to impose discipline on the science of economics. Rather like the use of barbed wire in preventing the encroachment of cattle farmers upon sheep farmers (and vice versa) and quietening the range wars in the old American West,, Samuelson's 'operationally significant' economics has imposed internal discipline and acted as a restraint (with certain conspicuous exceptions!) upon those who would invade the domain of sociological and political enquiry. If Leon Walras, by virtue of his general equilibrium system, deserved the accolade of the 'Isaac Newton' of economics, Samuelson, by virtue of his contributions to the unity of dynamic and static methods within economics, has a claim upon the epithet of Einstein. The following themes emanate from his work and enable us to define, more sharply, the man and his ideas.

(i) Samuelson's knowledge of the genealogy of economics is both immense and profound. As he has commented, this reflects the fact that his bloodlines would do credit to the daughters of the American revolution. Having distinguished mentors (e.g. Schumpeter, Knight, Viner, Leontief and Hansen) clearly bestows an advantage on a student, but when he produces distinguished pupils of his own (e.g. Solow, Mundell and Bhagwati), the stimulus obviously has not been one-sided. Furthermore, Samuelson is a consum­mate scholar who has, no more, no less, devoted himself daily over the years, to the study of this 'hard' discipline. The encyclopaedic knowledge that Samuelson possesses could be wielded as a weapon of intimidation; instead, Samuelson has used this knowledge constructively, as the next point makes clear,

(ii) Samuelson's disdain for spurious originality has meant that some of his work is characteristic of a brilliant expositor, rather than original thinker, yet a proper concept of originality is crucial to an epistemological understanding of any science, including economics. 'There is nothing new under the sun' runs the old adage and, in revealing the contributions of, inter alia, Wicksell and Lindahl to the theory of public expenditure and collective goods, Samuel­son seemingly qualifies his own work (1954,1958). However, as is often the case, his contribution sheds light on the opaqueness of the accumulated wisdom of interpretations and assessments. In other cases, the penetrating role of mathematics is evident (for example, the mathematical derivation of multiplier, accelerator, stability conditions that had been alluded to verbally, by Alvin Hansen, the architect of American 'Keynesianism'). Intellectual integrity of the kind that Samuelson displays provides a salutary lesson for those who dispute the value of history in the teaching of economics. Intellectual candour is also a welcome quality and, on a number of occasions, Samuelson has generously admitted the error of his ways. Thus, for example, in the, by now, infamous debate between the two 'Cambridge Schools', concerning the measurement, valuation and theory of capital, Levhari and Samuelson, (1966) confessed that a proposition that denied the reswitching, at low rates of interest, of a technique that had also been the most profitable at high rates of interest, in an indecomposable economy, was completely wrong. Insofar as this resulted in an obsessive study of, and exaggerated claim for, the importance of the pathological case of reswitching, Samuelson might be said to have had the last laugh. However, only the completely biased would deny the value of Samuelson's expository paper on reswitching, published contemporaneously with the admis­sion of error. Other recent cheerful confessions would include the recognition of the validity of Ohlin's partial factor-price-equalisation theorem of international trade (Samuelson, 1971b), an interesting example, in the context of the optimum growth rate for population, of Samuelson, for once, failing to specify sufficiently carefully the appropriate conditions for an unambiguous maximum,

(iii) Samuelson's description of economics as the science of the bourgeoisie does not represent an apologia for capitalism. As he has stated on many occasions, his overriding commit­ment is to the understanding of the behaviour of the 'mixed' capitalist economies. For Samuelson, this means under­standing the manner in which individuals respond to prices, markets and the impact of government intervention (although much of Samuelson's work is cast in the meth­odologically individualist framework, he is not unaware of the economic power exerted by the family and other groups). Samuelson's textbook Economics epitomises this approach and is, perhaps, with 10-million copies sold in many languages, the most influential piece of literature, for extolling the net benefits of the capitalist system, ever to be published.8 When Samuelson reflects that he would under­take whatever preparation was necessary to understand the workings of the capitalist economy, the fact that, by and large, this does not include the study of Marxian economics is because, for the most part, Samuelson identifies the operation of Soviet-type economies as containing little of economic interest, owing to the virtual absence of the bourgeois phenomena of markets and prices. Naturally, Samuelson's academic stance, as represented in Economics, invites the criticism that it conceals more than it reveals about the state of contemporary capitalism. The two-volume 'Anti-Samuelson' (Linder and Sensat, 1977) is a Marxist critique based on demonstrating the internal contradiction of the bourgeois theoretical approach contained in Samuelson's text. Samuelson, of course, would deny the existence of any logical contradictions in his work and point out that to criticise his economics for being bourgeois is to criticise it for being economics! It is another matter to criticise contemporary economics for being too narrow a searchlight on the unexplained recesses of the human condition and, in this respect, Samuelson is quite amenable to the incorporation of political, sociological and psychological enquiry into his assessment of wider social problems. However, this satisfies neither those who see economics of this kind as fragmented, teleological and non-evolutionary, failing to provide the foundations for a unified social science, nor those who see such economics as being incapable of explaining the historical development of capitalism, that arises from the inevitable contradictions between the re­lations and forces of production,

(iv) Whereas Samuelson's pre-eminent concern, in his early years as a writer, was with developing a holistic approach to scientific method in the disparate fields of economics, during the seventies, his attention was directed towards demonstrat­ing the unity of thought between Classical economists (which, in certain instances, included Marx) and revealing the isomorphic structure of Classical and Modern economics. Samuelson's view, as encapsulated in the aphorism 'within every classical economist there is to be discerned a modern economist trying to be born' might be regarded as danger­ously provocative, notwithstanding his disclaimer that the codification of classical economists will necessarily be over-simplistic and liable to distort in such a way as to both improve and libel the original works. Indisputably, Samuelson's treatment of Marx, subjecting the three vo­lumes of Capital to microscopic analytical scrutiny, is provocative; Samuelson's contention, forcibly expressed in a series of papers, is that Marx has an important place in the development of ideas and, in terms of his non-analytical contributions, to the tradition of radical thought within the social sciences.

However, Samuelson concludes that Marx is found wanting, analytically, since the crucial innovatory concept of equal rates of surplus value among industries, introduced in volumes one and two, is found to be irrelevant to the understanding of the laws of motion of the economic system (1974). Not surprisingly, some commentators regard this critique as an emasculation of Marx's contributions to a historical explanation of capitalist development: 'he deals with a Karl Marx who would have readily conceded to having been "only a minor Post-Ricardian", were he to be reborn with a faith that his economics could be so effectively de-institutionalised and drained-off of history and politics' (Bharadwaj 1968).